The $5.5 million investment is yet another sign that connected cars are the way of the future.

In a strong vote of confidence for the future of the connected car, Toyota announced today that it is joining forces with Microsoft to create a new division of its company that will use data from the cloud to make cars more intelligent.

The joint venture, called Toyota Connected, will be based in Texas and build its products on Microsoft’s Azure cloud computing platform. The lineup will include in-car services and telematics, smart home and IoT connectivity, smart city integration, and data services for Toyota affiliates and dealers.

Toyota plans to invest $5.5 million in the new venture, which will be headed by current Toyota vice president Zach Hicks. Much of its connected car technology will be based on Toyota’s existing R&D for smart automobiles, including an already-established partnership with Microsoft.

“Toyota Connected will help free our customers from the tyranny of technology. It will make lives easier and help us to return to our humanity,” Hicks said in a statement.

The announcement comes one week after Microsoft’s annual Build Developers Conference in San Francisco, where the software giant touted the benefits its Azure platform offers for connected devices. Also at the conference, BMW announced a new suite of connected servicesthat includes a cloud-enabled navigation app.

Toyota’s existing model lineup includes the recently announced Prius Prime, an updated version of the Prius plug-in hybrid that includes a multitude of software and entertainment add-ons. The Prime’s radio comes with predictive traffic and can also display Doppler weather radar on the in-dash display.

One concern with connected cars is privacy, especially since much of the technology relies on tracking the vehicle’s location. Toyota says its new Toyota Connected subsidiary will continue the company’s commitment to privacy, including following the Federal Trade Commission’s vehicle privacy standards.